It’s no surprise then that companies have been ditching the dreaded annual performance review. In its place, they’re bringing managers, employees and team members together for weekly, monthly or quarterly performance conversations.

The HCI survey shows organizations that develop and support managers as coaches and mentors (as opposed to judges) report greater financial success and satisfaction with the performance management process.

But there’s a catch. What if your managers and employees don’t know how to effectively communicate? What if they fall short of identifying progress (or setbacks) based on clearly defined short and long-term personal and corporate goals?

Here’s how to foster a culture of performance that replaces annual reviews with strategic, candid and growth-centered communication.

Train Managers First
To successfully replace annual reviews with more frequent development-focused communications, managers must hone their communication skills. They’ll need to coach, give meaningful feedback and discuss career development, says HCI Vice President of Research Jenna Filipkowski.

“Coaching is a discipline,” she says. “You need to learn skills and techniques; it’s not commanding and directing people to do something. It’s drawing potential and development and letting them do their best work, rather than giving everyone a set mandate to be successful.”

Provide managers with the resources they need to lead and coach. Without this foundation, your new communication strategy turns into all talk and no show.

Online resources to develop coaching skills are plentiful. HCI offers courses and certifications and SHRM does in-person and online training. Massive Open Online Courses (MOOCs) are another option.

What Makes Performance Feedback Good?
On-the-fly performance feedback programs are common in Silicon Valley. Implementing one requires a huge paradigm shift in larger, more established corporate cultures.

“When you’re growing as a company that’s the best time to do that paradigm shift,” says Gelena Sachs, Director of People Operations for Udemy for Business, a globally diversified company offering MOOCs -- including topics like coaching for performance.

What’s the key? Show people that feedback is a tool to help upscale their skills, better understand themselves and measure the value of the work they produce.

“People shouldn’t be afraid of giving or receiving feedback -- it’s a gift,” she says. “Without that feedback, you don’t know what you don’t know. That’s the area that gets brought to light for people,” says Sachs.

“Radical candor gets measured not at your mouth, but at the other person’s ear,” Scott says. Scott recommends that you tailor the message in a way that suits the listener’s personality.

A manager who challenges an employee directly, but doesn’t care personally, will come off as obnoxious and aggressive. Conversely, an overly empathetic manager who is unable to share negative feedback deprives his employee of the chance to learn and grow.

The worst managers don’t pass along genuine advice and only share feedback when it’s politically expedient for them. They’re guilty of manipulative insincerity. Scott says that the best managers practice impromptu radical candor.

When you see somebody do something fantastic in a meeting, speak up right then, she says. When someone screws up, tell the person in private immediately after the meeting.

“You have to have the presence of mind and emotional discipline to have that two-minute conversation. You have to be willing to be late to your next meeting or have slack time in your schedule,” adds Scott.

1. Have a performance review system that collects and shares performance feedback from key stakeholders, including managers, co-workers, customers and investors.

2. Encourage employees to take ownership of their careers by choosing development tracks or career paths and then decide what they need to achieve their goals, like classes, stretch assignments, or rotations in other areas of the company.

3. Managers who are trained to identify employee strengths and opportunities to improve and who can coach for improved performance and career guidance.

4. Corporate cultural support of candid conversations about what’s working and what needs improvement among co-workers, bosses, and subordinates.

5. A way to measure employee performance against objective individual, team and/or position-related key performance indicators (KPIs). When ranked against others in the company, lower-ranked workers aren’t punished, as long as they meet their KPIs. These workers are counseled into different positions if they continually fail to meet KPIs.